Henderson Land Falls After Missing Estimates: Hong Kong Mover

Henderson Land, which co-owns the International Finance Centre office and mall complex in the city’s central business district, said profit from investment properties in the city rose to HK$2.6 billion from HK$1.9 billion. Photographer: Thomas Lee/Bloomberg

Henderson Land dropped 0.8 percent to HK$45.70 at the close
of trading, the lowest since March 9, cutting its gain this year
to 18 percent. Profit excluding property revaluation gains and
deferred taxes rose 10 percent to HK$5.6 billion ($721 million)
in the 12 months ended Dec. 31, missing the HK$6.1 billion
median estimate of five analysts surveyed by Bloomberg News.

The builder didn’t start selling any new residential
projects last year in Hong Kong, where home prices and
transactions fell in the second half because of rising mortgage
rates and curbs imposed by the government to prevent the
formation of an asset bubble. Hong Kong home prices declined 4
percent in the second half, after gaining more than 70 percent
since the beginning of 2009.

“We think a risk of disappointment remains” for 2012,
Standard Chartered Plc’s Hong Kong-based analysts Paul Yau and
Allen Chan wrote in a report today. “Good sales execution will
be necessary before any re-rating.”

Profit from property sales was HK$2.2 billion, compared
with a loss of HK$211 million a year earlier, after the company
booked sales from projects including the Beverly Hills and
Headland Road, Henderson Land, founded by Lee in 1973, said in a
statement to the Hong Kong stock exchange yesterday. Lee, 84, is
27th on the Bloomberg Billionaires Index with a net worth of
$19.9 billion.

The company was expected to post profit from property sales
of HK$2.5 billion, Raymond Ngai, an analyst at Bank of America
Corp.’s Merrill Lynch & Co. unit, wrote in a March 19 report.
Hong Kong developers sell apartments as they’re being built and
book profits upon completion.

Retail Rents

The seven-member Hang Seng Property Index, of which
Henderson Land is a member, fell 0.2 percent today. It has
climbed 15 percent this year.

The city’s fourth-biggest builder by value in 2011 sold a
total of 812 units in the city for HK$16.2 billion, accounting
for about 9 percent of total residential units sold in Hong Kong,
according to data compiled by Centaline Property Agency Ltd.

“Starting from mid-2011, stabilizing measures introduced
by the Hong Kong SAR Government, the lingering European debt
crisis and the growing concerns over economic deterioration in
both mainland China and the United States led to a stagnant
property market in the latter half of the year,” the company
said in the statement.

Rental Income

The company’s gross rental income increased 11 percent to a
record in 2011 as the influx of tourists from other parts of
China and expansion by financial companies fueled growth in
retail and office properties.

Henderson Land, which co-owns the International Finance
Centre office and mall complex in the city’s central business
district, said profit from investment properties in the city
rose to HK$2.6 billion from HK$1.9 billion.

Hong Kong’s prime shopping mall rents, which climbed more
than 12 percent last year, will “stay strong” in 2012 with
international brands continuing to come into the market, said
Tom Gaffney, head of retail for property broker Jones Lang
LaSalle Inc. Office rents, which rose 16 percent in 2011, will
drop 15 percent this year, according to Jones Lang, the world’s
second-biggest publicly traded commercial-property broker.

Including revaluation net of non-controlling interests and
deferred taxes, profit rose to HK$17.2 billion, or HK$7.44 a
share, from HK$15.8 billion, or HK$7.32, the company said.

Henderson Land, which has been buying rural farm land with
plans to convert it into residential projects, continued “its
prudent practice” of buying old tenement buildings in urban
areas for redevelopment, it said in the statement.

The company will pay a final dividend of 70 Hong Kong cents
a share, unchanged from last year.